6. PLAN DE SEGUIMIENTO
6.2. Seguimiento del Panel de Indicadores de Sostenibilidad de Areatza
1. The government should continue to closely monitor Ontario’s auto insurance system, claims costs, and activity of participants in the system and make timely legislative and regulatory changes to address emerging problems, issues or areas of rising costs.
2. All participants in the auto insurance system have a responsibility to continue to focus on reducing and controlling auto insurance costs and dealing with the ongoing challenges associated with fraud and misuse of the system.
3. The government should examine and consider the accident benefits structures of comparable auto insurance systems in Canada that have lower costs. 4. The government should examine and consider giving consumers more flexibility
and choice to buy coverage options that reflect their individual circumstances and needs.
5. The Ministry of Finance and FSCO should work with experts to develop a program to educate consumers and auto insurance stakeholders about expectations for treatment and recovery following a motor vehicle accident. 6. Health care and insurer representatives should jointly examine and make
recommendations on:
a) appropriate qualifications for auto insurance examiners
b) standards and processes in requesting, writing and delivery of auto insurance assessments and examinations
c) frequency and costs associated with auto insurance assessments and examinations, including missed or cancelled appointments
Recommendation 10
Automobile insurers, brokers and the taxi cab industry
representatives should form a committee to explore and make
recommendations to expand the availability of taxi insurance and
7. The government should examine and consider additional ways to address the rising cost of bodily injury claims.
8. The government should examine and consider increasing the standard policy deductible for optional comprehensive coverage.
9. Insurance industry associations should conduct an industry-wide review of auto insurance claims adjustment and handling policies, practices and performance. 10. Automobile insurers, brokers and the taxi cab industry representatives should
form a committee to explore and make recommendations to expand the availability of taxi insurance and optional insurance coverages for rental vehicles.
Appendix 1
This review is a consolidation of three previous statutory reviews:
• A five-year review of Part VI of the Insurance Act (Automobile Insurance) and related regulations;
• A three-year review of the operation of regulations prescribing or prohibiting
coverages and categories of auto insurance, and regulations governing prescribed or prohibited risk classification systems or elements of a risk classification systems; and, • A two-year review of the Statutory Accidents Benefits Schedule (SABS).
Part VI includes provisions that deal with approval of forms, motor vehicle liability policies, statutory conditions, direct compensation for property damage, court
proceedings, and dispute resolution. Regulations under Part VI include the Statutory Accident Benefits Schedule (SABS), uninsured automobile coverage, fault
determination rules, disputes between insurers, court proceedings and coverages and categories of automobile insurance and risk classification systems.
Section 289 of the Insurance Act requires:
• The Superintendent to undertake a review at least every three years or more often at the request of the Minister of the following matters:
1. Part VI (Automobile Insurance) and any related regulations, excluding those made under the paragraphs of subsection 121 (1) that are referred to in paragraph 2. 2. A review of the operation of such regulations made under paragraphs 35, 36 and
36.1 of subsection 121 (1) as the Minister may request.
• The Superintendent to give a report to the Minister setting out the results of the review, any recommendations made by the Superintendent and such other information as the Minister may request.
• The Minister to lay the Superintendent’s report before the Assembly at the earliest reasonable opportunity.
• The Superintendent to begin a review under this section no later than 2013. Paragraphs 35, 36, and 36.1 under subsection 121(1) are:
• 35. prescribing coverages and categories of automobile insurance that may be provided by insurers and prescribing coverages and categories of automobile insurance that insurers are prohibited from providing;
• 36. prescribing a risk classification system or elements of a risk classification system that must be used by insurers or a class of insurers in classifying risks for a coverage or category of automobile insurance; and,
• 36.1 prescribing elements of a risk classification system that insurers or a class of insurers are prohibited from using in classifying risks for a coverage or category of automobile insurance.
Appendix 2
Ontario Private Passenger Auto (PPA) Insurance Claims and Costs for Select Coverages
Ontario PPA Accident Benefits coverage – claims and costs Accident
Year Vehicles Insured Claims
Claims per insured
vehicle Claim Costs
Average cost per claim Cost per insured vehicle 2009 6,492,051 73,564 1.13% $3,814,395,697 $51,851 $587.55 2010 6,563,999 79,882 1.22% $3,783,673,464 $47,366 $576.43 2011 6,666,669 67,626 1.01% $2,128,027,644 $31,468 $319.20 2012 6,774,926 62,840 0.93% $1,919,708,363 $30,549 $283.35 2013 6,856,005 67,541 0.99% $2,146,822,685 $31,786 $313.13 Total 33,353,650 351,453 1.05% $13,792,627,854 $39,245 $413.53
Ontario PPA Bodily Injury (tort) coverage – claims and costs Accident
Year Vehicles Insured Claims
Claims per insured
vehicle Claim Costs
Average cost per claim Cost per insured vehicle 2009 6,494,909 14,447 0.22% $2,015,451,373 $139,508 $310.31 2010 6,564,581 16,726 0.25% $2,168,353,395 $129,642 $330.31 2011 6,651,810 13,789 0.21% $2,026,669,682 $146,980 $304.68 2012 6,767,425 14,420 0.21% $2,157,263,376 $149,603 $318.77 2013 6,850,664 17,334 0.25% $2,484,295,369 $143,319 $362.64 Total 33,329,390 76,715 0.23% $10,852,033,196 $141,459 $325.00
Ontario PPA Collision coverage (all deductibles) – claims and costs Accident
Year Vehicles Insured Claims
Claims per insured
vehicle Claim Costs
Average cost per claim Cost per insured vehicle 2009 4,386,979 128,209 2.92% $665,156,493 $6,427 $151.62 2010 4,422,614 120,531 2.73% $664,553,484 $6,730 $150.26 2011 4,480,513 120,826 2.70% $697,111,402 $6,955 $155.59 2012 4,563,920 116,328 2.55% $683,932,694 $7,089 $149.86 2013 4,634,796 126,760 2.73% $762,421,873 $6,942 $164.50 Total 22,488,822 612,654 2.72% $3,473,175,946 $6,826 $154.44
Ontario PPA Comprehensive (all deductibles) coverage – claims and costs per insured vehicle
Accident
Year Vehicles Insured Claims
Claims per insured
vehicle Claim Costs
Average cost per claim Cost per insured vehicle 2009 4,937,658 141,235 2.86% $334,155,457 $2,366 $67.67 2010 4,978,508 116,776 2.35% $259,126,622 $2,219 $52.05 2011 5,035,145 155,790 3.09% $321,304,204 $2,062 $63.81 2012 5,110,808 150,530 2.95% $315,419,558 $2,095 $61.72 2013 5,170,879 144,692 2.80% $315,199,980 $2,178 $60.96 Total 25,232,998 709,023 2.81% $1,545,205,821 $2,179 $61.24
Source: 2013 General Insurance Statistical Agency exhibit for private passenger vehicles. Costs = insurer incurred claim costs and adjustment expenses projected to ultimate values using GISA factors.
Appendix 3
Ontario’s Automobile Insurance Coverages Mandatory Coverages
Third-Party Liability
• Pays for legal claims as a result of lawsuits for excess economic damages and pain and suffering • Minimum coverage by law is
$200,000
• Court awards for pain and
suffering include policy deductible amounts
Statutory Accident Benefits Schedule (SABS)
• Provides benefits, if a person is injured in an accident, regardless of who caused the accident. • Includes medical and
rehabilitation, income
replacement, attendant care, death and funeral coverages
Direct Compensation
• Covers damage to an insured vehicle to the extent that another driver was at-fault for the accident
Uninsured Automobile Coverage
• Protects drivers from damage caused by an uninsured motorist
Optional Coverages Third-Party liability
• Higher limits for third-party liability coverage available; coverage in most policies is $1 million
• Lower mandatory deductible
Direct Compensation
• Various deductibles, including $0
Collision
• Coverage for repairs to an insured vehicle for the portion that the insured driver is at-fault, various deductibles
Comprehensive
• Pays for losses from theft, fire and non-collision damage, various deductibles
Optional Accident Benefits
• Can include higher limits for standard Accident Benefits coverages,
indexation or coverages such as housekeeping and caregiving
Other Optional Coverages
• Such as the cost of a rental vehicle during repair of an insured vehicle
Appendix 4
Evolution of Auto Insurance in Ontario
Successive governments have had to respond to rising costs of auto insurance and re- establish an appropriate balance between price and coverages through various reforms. The principal focus of many of these reforms has involved the right to sue (the tort
system) and the accident benefits structure. Following is a description of how the system has evolved over the past 25 years.
Late 1980s
In the mid-1980s the Ontario Task Force on Insurance, headed by Dr. David Slater, was appointed to study problems of availability, affordability and adequacy of general liability insurance in Ontario.
The Slater Task Force released its report in May of 1986. Although the focus of the Slater Task Force was primarily on forms of liability insurance other than auto, Dr. Slater did make some recommendations concerning auto insurance and the issue of tort
reform.
In November of 1986 the government appointed the Honourable Justice Coulter Osborne to conduct a review of the tort system for compensation for injuries in automobile accidents and the consequences of the implementation of a no-fault automobile accident scheme.
The Report of Inquiry into Motor Vehicle Accident Compensation in Ontario (Osborne Report) by the Honourable Mr. Justice Coulter Osborne was released in 1988. However, costs continued to rise due primarily to the costs of litigation and court awards. The government requested that a reference hearing be held by the Ontario Automobile Insurance Board in 1989 on no-fault systems. This led the Liberal
government to implement reforms in 1990 that were commonly known as the Ontario Motorist Protection Plan (OMPP).
1990 – Ontario Motorist Protection Plan
The OMPP represented a fundamental shift in focus from the primary delivery of compensation through the tort system to compensation primarily being paid directly for physical damage and no-fault accident benefits for injuries. In exchange for these no- fault accident benefits, access to the right to sue for damages for both economic loss and pain and suffering was restricted to cases involving death or injuries that were permanent, serious and physical in nature. The changes also adopted a number of recommendations set out in the Osborne Report. In addition, a system for rate approvals was introduced along with a mediation and arbitration system for disputes between claimants and insurance companies. This was delivered outside of the courts through the Ontario Insurance Commission (the predecessor to FSCO).
1994 – Bill 164
In September 1990, a New Democratic government was elected. Its platform had included the establishment of a public auto insurance system. In September 1991, the government decided not to proceed with a government-run system and instead
implemented an expanded accident benefits schedule in January 1994, through Bill 164 (Insurance Statute Law Amendment Act). The reforms significantly expanded the level and access to accident benefits while eliminating the right to sue for economic damages and expanded access to sue for pain and suffering for serious injuries. An increase in costs and in premiums followed.
1996 – Bill 59
Following the election of the Progressive Conservative Party in 1995, the government reintroduced the right to sue for economic losses and continued limited access to court for pain and suffering with a $15,000 deductible. The mandatory medical and
rehabilitation coverage was also reduced to $100,000 for non-catastrophic injuries and $1,000,000 for catastrophic injuries. Other changes included the ability for the
Commissioner of Insurance (predecessor to the Superintendent of Financial Services) to issue fee schedules for health care providers and services, and the requirement for providers to submit treatment plans and seek prior approval before commencing treatment. While costs and premiums stabilized initially after 1996, by 2000 costs had again risen substantially.
2003 Reforms
In response to the sharp increase in the costs of both accident benefits and court settlements, premiums increased significantly up to and through 2003 triggering action by government. In 2003, a number of significant reforms were implemented including Bill 198, Keeping the Promise for a Strong Economy Act (Budget Measures), 2002, introduced by the Progressive Conservative government. These reforms:
a) Introduced a Pre-approved Framework (PAF) guideline for the treatment of whiplash injuries, which accounted for the majority of automobile insurance medical and rehabilitation claims. A limit was set on the amount that could be billed without prior approval;
b) Reduced the maximum hourly rate by 30% for most health care providers by issuing professional fee guidelines;
c) Expanded the right to sue for excess health care expenses;
d) Doubled the deductible for court awards for pain and suffering to $30,000 (and $15,000 for family members for Family Law Act awards); and,
e) Initiated a regular review of the automobile insurance system every five years to be conducted by the Superintendent of Financial Services and to be reported back to the Minister of Finance.
Later in 2003, the new Liberal government introduced the Automobile Insurance Rate Stabilization Act, 2003 (Bill 5), as a temporary measure to freeze auto insurance rates and then facilitate a rate reduction of 10%.
As with most previous cycles, the reforms were initially followed by a reduction in premiums and more stable costs. However, premiums again began to rise in 2008, although the average nominal premium only returned to the 2003 level by the end of 2009.
Rising costs and premiums led the government to address the design of the auto insurance product utilizing recommendations set out by the Superintendent in the 2009 Report on the Five Year Review of Automobile Insurance and other work.
September 2010 Reforms
In September 2010, a series of reforms were introduced which included new cost controls, a focus on evidence-based approaches to treatment and increased optional coverages available to consumers. Key changes included:
a) Reducing standard medical coverages and standard attendant care benefit coverages (giving consumers the option to purchase additional coverages based on individual needs and budgets);
b) Making caregiver, housekeeping and home maintenance expense coverage optional for non-catastrophic injuries;
c) Capping the costs for assessments at $2,000 per assessment (whether initiated by an insurer or claimant);
d) Capping treatment coverage for minor injuries at $3,500;
e) Requiring insurers to provide claimants with statements every two months that would list the amount of remaining coverage for the medical and rehabilitation, and attendant care benefits; and,
f) Providing more options for consumers to tailor their coverages according to their needs.
Appendix 5
Comparison of Key Accident Benefit and Tort Changes of September 1, 2010 to Previous System
Previous System September 1, 2010 Reforms Effective Income
Replacement Benefit (IRB)
• 80% of net income to $400/week after 1 week of disability
• First 104 weeks test is
“substantial inability to perform tasks of his or her pre-accident employment”
• Benefit limited to 12 weeks after accident for whiplash associated disorders (WAD) I injuries and 16 weeks for WAD II
• 70% of gross income to $400/week after 1 week of disability
• First 104 weeks test is
“substantial inability to perform tasks of his or her pre-accident employment”
Optional IRB • Optional benefit provides for up to $600, $800 or $1,000 per week
• No change
Non-Earner
Benefit • $185/week after 26 weeks of disability • Test is “completely unable to
carry on a normal life” and either does not qualify for IRB, is a full time student, or graduated in the past year but not employed
• No change
Caregiver
Benefit • $250/week for first person in need of care and $50 for each additional person, flat amounts • First 104 weeks test is
“substantial inability to engage in caregiving activities”
• After 104 weeks benefit
continues to be paid if “complete inability to carry on normal life”
• Under standard policy payable only to individuals with
catastrophic impairments • Up to $250/week for the first
person in need of care and $50 for each additional person, expense driven
Optional Caregiver Benefit
• $325/week for the first person in need of care and $75 for each additional person
• Available as an optional benefit for non-catastrophic injuries
Housekeeping and Home Maintenance Expenses
• $100/week for 104 weeks for non-catastrophic impairments • $100/week lifetime for
catastrophic impairments
• Under standard policy payable only to individuals with
catastrophic impairments • Available as an optional benefit
for non-catastrophic injuries, for up to 104 weeks
Medical and Rehabilitation Benefits
• $100,000 maximum over 10 years or to age 25 if under 15 • $1 million lifetime maximum for
catastrophic impairments
• Goods and services require prior
• $50,000 maximum over 10 years or to age 25 if under 15
• $1 million lifetime maximum for catastrophic impairments • $3,500 maximum for minor
Comparison of Key Accident Benefit and Tort Changes of September 1, 2010 to Previous System
Previous System September 1, 2010Reforms Effective
approval (within 10 days) by insurer except emergency ambulance services
• No prior approval required for WAD I or II injuries treated under a Pre-approved Framework Guideline
injuries which include a sprain, strain, whiplash disorder, contusion, abrasion, laceration, subluxation and any clinical associated sequelae
• Goods and services require prior approval (within 10 days) by insurer except emergency
ambulance services, prescription drugs and goods under $250 • No prior approval required for
minor injuries treated under a Minor Injury Guideline
Attendant
Care Benefit • Up to $3,000/month for incurred expenses with an overall maximum of $72,000 in the first 104 weeks
• Up to $6,000/month for incurred expenses with a lifetime
maximum of $1 million for catastrophic impairments • No attendant care benefit
payable for WAD I or II injuries
• Up to $3,000/month for incurred expenses with an overall
maximum of $36,000 in the first 104 weeks
• Optional benefit of $72,000 available
• Up to $6,000/month for incurred expenses with a lifetime
maximum of $1 million for catastrophic impairments • No attendant care benefit payable for minor injuries • Incurred expenses defined as
services received from an attendant in the course of their employment or from a person who sustains an economic loss while providing the services
Optional Medical, Rehabilitation and Attendant Care Benefit • Up to $1,100,000 lifetime for medical and rehabilitation expenses and $1,072,000 lifetime for attendant care expenses (but no more than $1,172,000 in combined expenses) for non-catastrophic impairments
• Up to $2 million lifetime for medical and rehabilitation
expenses and $2 million lifetime for attendant care expenses (but no more than $3 million in combined expenses) for catastrophic impairments
• Optional benefits of $100,000 and $1 million combined with attendant care available
• Another higher level of optional benefits from previous system still available
Comparison of Key Accident Benefit and Tort Changes of September 1, 2010 to Previous System
Previous System September 1, 2010Reforms Effective Medical Assessments and Examinations requested by insured
• Insured requested assessments not subject to monetary limits but subject to prior approval (within 3 days) by insurer if over $200
• Rebuttal examinations available for denial of benefits following an insurer examination capped at $900 (no cap for catastrophic impairments)
• Claimant requested
assessments subject to the medical and rehabilitation
monetary limit chosen by insured and requires prior approval (within 10 days) by insurer • Completion of listed forms
(including assessments) capped at $200 by Professional Services Guideline
• All other insured requested assessments capped at $2,000 • Future care reports not
recoverable
• Attendant care assessments only conducted by occupational therapists and registered nurses • Catastrophic impairment
assessments only conducted by physicians or, in the case of brain injuries,
neuropsychologists • In-home assessments not
available for minor injuries • No rebuttal examinations
Insurer
Examinations • Insurer examination is required for denial of benefits for medical reasons
• Restrictive time and geographic limits for conducting insurer examinations
• Insurer examinations not subject to monetary limits
• Insurer examinations are discretionary
• No time or geographic limits • Insurer examinations capped at
$2,000
Death
Benefits • $25,000 paid to surviving spouse • $10,000 paid to each surviving
dependants
• $10,000 paid for loss of each dependant
• No change
Funeral
Expenses • $6,000 maximum for funeral expenses • No change
Optional Death and Funeral Benefit • $50,000 paid to surviving spouse
• $20,000 paid to each surviving dependants
Comparison of Key Accident Benefit and Tort Changes of September 1, 2010 to Previous System
Previous System September 1, 2010Reforms Effective
• $20,000 paid for loss of each dependant
• $8,000 maximum for funeral expenses
Optional Dependant Care Benefit
• Optional benefit provides
$75/week for the first dependant and $25 for each additional dependant to a maximum of $150/week • No change Optional Indexation Benefit
• Optional benefit annually increases income replacement benefit, non-earner benefit, and caregiver benefit payments, medical and rehabilitation limits, and attendant care limits to changes in CPI • No change Lost Educational Expenses • Up to $15,000 in lost
educational expenses (tuition, books, equipment, room and board)
• No change
Visitor
Expenses • Incurred expenses for relatives (defined the SABS) while visiting insured during treatment or recovery
• No change
Interest • 2% per month compounded
monthly • 1% per month compounded monthly
Catastrophic
Impairment • Definition includes loss of both arms, loss of both legs, or loss of an arm and a leg
• Definition expanded to include the loss of an arm or leg
Deductible from pain and suffering damages
• $30,000 ($15,000 for FLA claims)
• No deductible applied if general damages exceed $100,000 ($50,000 for FLA claims)
• Option to purchase an endorsement to reduce
deductible to $20,000 ($10,000 for FLA claims)
• No deductible applied if general damages exceed $100,000 ($50,000 for FLA claims) • No deductible for fatality claims
Appendix 6
As shown in the chart below, the demand for mediation services for accident benefit claim disputes was relatively stable until 2008 when mediation applications grew
significantly until peaking in 2011. This was followed by rapid growth in the demand for